TaxTMI 
TaxTMI 
TaxTMI 
2018 (6) TMI 49
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.... exist in the notified area as claimed by the assessee. 3. On the facts and in the circumstances of the case the learned Commissioner of Income-tax (Appeals) has erred in allowing the deduction under section 80-IC as the extremely poor consumption of electricity is a strong indicator of non-existence of business. 4. The appellant craves leaves to add, alter or amend any of the grounds of appeal before or during the course of hearing of the appeal." 2. Briefly stated facts of the case are that the assessee filed return of income on October 9, 2010 declaring nil income. The case was selected for scrutiny and notice under section 143(2) of the Income-tax Act, 1961 (in short "the Act") was issued and complied with. In the scrutiny proceedings, the Assessing Officer disallowed the claim of deduction under section 80-IC of the Act amounting to Rs. 86,59,086. The assessee claimed deduction under section 80-IC of the Act for development of a software, which automatically controlled the inbuilt generators installed beneath the telephone towers for communication. The learned Commissioner of Income-tax (Appeals) allowed the appeal of the assessee following the order of the Commissioner of ....
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....f rental agreement for the premises, documents in support of power connection, documents in relation to registration of the unit with the District Industry Centre, Roorkee, District Haridwar, documents of registration with the Central excise Department and visit by the Central Excise Authorities, registration under VAT and CST with Commercial Taxes Department of Government of Uttra khand, no objection certificate from pollution-control authorities, in support of its contention that the unit was set up at said premises. The assessee submitted that the unit was closed with effect from August 16, 2010 due to rapidly diminishing demand and resulting cancellation of the orders to its suppliers. The assessee further submitted that the unit of the assessee was closed down w.e.f. 16th of August 2010, whereas the Assessing Officer made the site visit at the time of assessment proceedings somewhere about the end of the year 2011, and therefore he doubted the existence of the unit at the said premises. The assessee also filed copy of the documents referred above in the paper book before us. Having gone through the documents, the finding of the Assessing Officer that the unit was not in existe....
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....printed circuit board. Boards and components are purchased from external parties. The micro-controller, which, is the heart of the system, are also purchased from external parties and programmed. Once all items are available, a technician will mount the components on the PCB and solder them. A typical soldering station will require less than 100 Watts of power. The system is powered on using a 12V battery and the consumption of current in the system is in milli-amperes. The micro controller performs a self-test and checks all components are healthy and working. Once the test is passed, the system is ready. Given the huge dependence of the system on software and its capa bility to perform self-diagnostics and test, there is really no need for any huge plant and machinery. The operating voltage and operating current are also so less that the power consumption is indeed very less. Also there is no dependence of the manufacturing process on temperature, humidity etc., or other environmental factors. It has been already informed to the assessing officer that the partners of the assessee firms are qualified engineers as Mr. S. P. Tiwari is an electrical engineer from the prestigious Be....
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.... not debited expenses on freight inward or outward. In this connection, the assessee has made the following submission : 'That the assessee was not in the manufacturing of any big items which requires heavy freight and cartage inward or outward. The assessee unit was in the business of manufacturing of embedded soft ware systems which are small, low power systems which run on battery. They require little freight and cartage which was borne by the seller at the time of purchase or raw material and by the purchaser at the time of sale of finished goods. All inward material has been accompanied with Form-16 that is checked on the border of Uttarakhand and stamped. The assessee has received Form C and Form 11 from customers who have bought the material manufactured by the assessee.' 1.6.2 Conventional thinking suggests that, if manufacturing takes place, there should be freight expenses, both inward and outward and, if they are not there, the genuineness of the business results may be doubted. But, the assessee has furnished proper explanation. Its submission that the freight was borne by the supplier/s on the input and by the customer/s on the output may appear unusual b....
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.... pollution. 14. DIC registration (Part 2). 15. Letter to Excise for closure. 16. Closure acknowledgment from VAT Department. 17. Closure Information to DIC. 18. Final meter sealing certificate. 19. Sales tax assessment certificates. 1.9 The foregoing analysis shows that the Assessing Officer noticed some unusual features in the assessee's business and became suspicious of its genuineness as well as profitability. That was alright. But, he did not find any positive discrepancy in the assessee's books of account and other documents relating to the business that were produced before him. Nor did he get adverse evidence on the basis of his independent enquiry. On the other hand, the assessee has furnished adequate explanation for all these unusual features of its business. The partners of the assessee-firm are highly qualified tech nocrats. The father is a Vishishta Seva Medal (VSM) decorated retired officer of the Indian Air force and was noted for his expertise in communication electronics. The son is a distinguished computer scientist who had won accolades while working with Adobe Inc. They got together to do business for BSNL, supplying their product through t....